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California’s Density Bonus Law – 2023 Update

California’s Density Bonus Law provides housing developers with tools to encourage the development of much needed affordable and senior housing. The California Legislature has continued to refine the Density Bonus Law over the past year, with new legislation taking effect on January 1 of this year that provides additional flexibility to developers in meeting the requirements for a density bonus. In addition, a 2022 appellate court ruling upheld the right of density bonus developers to obtain waivers and modifications of local development standards, even when the project could be redesigned to comply with those standards.

These changes are outlined below and incorporated into the 2023 update of our Guide to the California Density Bonus Law. Please click here to download the 2023 Guide. If you have questions about the Density Bonus Law or information in the Guide, please contact the author of the Guide, Meyers Nave attorney Jon Goetz, at jgoetz@meyersnave.com.

2023 Changes

Shared Housing Projects. AB 682 establishes “shared housing” as a new category of housing eligible for a density bonus and the other benefits of the Density Bonus Law. “Shared housing” is defined in the legislation as a residential or mixed use structure containing five or more private units which share common areas such as a kitchen or dining area. The separate units within the shared housing development are treated the same as traditional self-contained housing units for purposes of the density bonus law. The new legislation opens up the density bonus law to support a wider range of housing options such as group homes.

Base Density Calculation. Under the Density Bonus Law, the density bonus amount is calculated on a “base density” of the number of units that would be permitted to be constructed under generally applicable local requirements. Most cities and counties have adopted standards for the maximum number of units per acre, which can be used to calculate the base density. But for those communities that do not have such standards, it can be very difficult to determine the base density. AB 682 establishes a method for determining the base density in those communities, which is to be estimated by analyzing objective standards for such factors as allowable floor area ratios, setback requirements, open space and parking requirements. The developer may submit a base density study to the community, which must accept it if it has included all applicable objective development standards.

Very Low Vehicle Travel Areas. AB 2334 provides that 100% affordable housing projects in “very low vehicle travel areas” in specified urban counties are entitled to unlimited density and height limit increases of up to 33 feet. A “very low vehicle travel area” is defined as an “urbanized area” located within one of the designated counties with per capita vehicle miles travelled per capita at 85% or less of the per capita vehicle miles travelled per capita for the region or city as a whole. These benefits are available in ten Northern California counties (Alameda, Contra Costa, Marin, Napa, Sacramento, San Francisco, San Mateo, Santa Clara, Solano and Sonoma), and seven Southern California counties (Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara and Ventura). This is the first time the density bonus law has provided special benefits to housing developments on the basis of vehicle miles travelled.

Development Bonuses for Commercial Projects. AB 1551 readopts legislation that sunsetted at the end of 2021 requiring that cities and counties provide a “development bonus” to commercial developers who partner with affordable housing developers for the construction of affordable housing on the commercial project site, or offsite within the jurisdiction located near schools, employment and a major transit stop. The commercial developer may participate through the donation of land or funds for the affordable housing, or direct construction of the housing units. To be eligible for the development bonus, at least 30% of the housing units must be restricted to lower income residents or 15% of the housing units must be restricted to very low income residents. Unlike the primary Density Bonus Law, there is no fixed amount of increased density awarded to the developer. Instead, the development bonus can be any mutually agreeable incentive, including up to a 20% increase in development intensity, floor area ratio, or height limits, up to a 20% reduction in parking requirements, use of a limited use elevator, or an exception to a zoning ordinance or land use requirement.

Elimination of Project Amenities to Comply with Development Standards.
An appellate court ruled in 2022 that a developer who seeks to waive or reduce development standards under the Density Bonus Law cannot be required to strip the project of amenities or redesign the project in order to meet local development standards. In that case, Banker’s Hill 150 v. City of San Diego, 74 Cal. App. 5th 755 (2022), a developer of a 204 unit residential project required a waiver or modification of the city’s height limit in order to accommodate all of the units it was entitled to build under the density bonus law. Project opponents argued that the city’s height limit did not need to be waived because the project could be redesigned to meet the height limit by eliminating an interior courtyard. The court ruled that the city had properly waived the height limit, as the city could not demand that the developer remove the courtyard in order to satisfy existing development standards. The court remarked that the density bonus law “provides a developer with broad discretion to design projects with additional amenities even if doing so would conflict with local development standards.”